Finance Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 38 — Stamp duty land tax: claims not included in returns
544

Penalty for failure to produce documents etc
10    (1)
A person who fails to comply with a notice under paragraph 8
(notice to produce documents etc for purposes of enquiry) is
liable—
(a)
to a penalty of £50, and
5
(b)
if the failure continues after a penalty is imposed under
paragraph (a), to a further penalty or penalties not
exceeding £30 for each day on which the failure continues.
      (2)
No penalty shall be imposed under this paragraph in respect of a
failure at any time after the failure has been remedied.
10
Completion of enquiry
11    (1)
An enquiry under paragraph 7 is completed when the Inland
Revenue by notice (a “closure notice”) inform the purchaser that
they have completed their enquiries and state their conclusions.
      (2)
A closure notice must either—
15
(a)
state that in the opinion of the Inland Revenue no
amendment of the claim is required, or
(b)
if in the Inland Revenue’s opinion the claim is insufficient
or excessive, amend the claim so as to make good or
eliminate the deficiency or excess.
20

In the case of an enquiry into an amendment of a claim, paragraph
(b) applies only so far as the deficiency or excess is attributable to
the amendment.
      (3)
A closure notice takes effect when it is issued.
Direction to complete enquiry
25
12    (1)
The claimant may apply to the General or Special Commissioners
for a direction that the Inland Revenue give a closure notice within
a specified period.
      (2)
Any such application shall be heard and determined in the same
way as an appeal.
30
      (3)
The Commissioners hearing the application shall give a direction
unless they are satisfied that the Inland Revenue have reasonable
grounds for not giving a closure notice within a specified period.
Giving effect to amendments under paragraph 11
13    (1)
Within 30 days after the date of issue of a notice under paragraph
35
11(2)(b) (closure notice that amends claim), the Inland Revenue
shall give effect to the amendment by making such adjustment as
may be necessary, whether—
(a)
by way of assessment on the claimant, or
(b)
by discharge or repayment of tax.
40
      (2)
An assessment made under sub-paragraph (1) is not out of time if
it is made within the time mentioned in that sub-paragraph.

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
545

Appeals against amendments under paragraph 11
14    (1)
An appeal may be brought against a conclusion stated or
amendment made by a closure notice.
      (2)
Notice of the appeal must be given—
(a)
in writing,
5
(b)
within 30 days after the date on which the closure notice
was issued,
(c)
to the officer of the Board by whom the closure notice was
given.
      (3)
The notice of appeal must specify the grounds of appeal.
10
      (4)
On the hearing of the appeal the Commissioners may allow the
appellant to put forward grounds not specified in the notice, and
take them into consideration, if satisfied that the omission was not
deliberate or unreasonable.
      (5)
Paragraph 37 of Schedule 10 (settling of appeals by agreement)
15
applies in relation to an appeal under this paragraph as it applies
in relation to an appeal under paragraph 35 of that Schedule.
      (6)
On an appeal against an amendment made by a closure notice, the
Commissioners may vary the amendment appealed against
whether or not the variation is to the advantage of the appellant.
20
      (7)
Where any such amendment is varied, whether by the
Commissioners or by the order of a court, paragraph 13 (giving
effect to amendments under paragraph 11) applies (with the
necessary modifications) in relation to the variation as it applied
in relation to the amendment.
25
Jurisdiction of Commissioners
15    (1)
An appeal against a conclusion stated or amendment made by a
closure notice is to be made to the Special Commissioners if it
relates to a claim made to the Board.
      (2)
Subject to—
30
(a)
sub-paragraph (1),
(b)
paragraph 33(4) of Schedule 10 (appeal against decision on
claim for relief in case of double assessment), and
(c)
any right to elect to bring an appeal before the Special
Commissioners conferred by regulations under Schedule
35
17 (General and Special Commissioners, appeals and other
proceedings),

an appeal under any provision of this Schedule is to be made to the
General Commissioners.”
Schedule 39
40
Section 288

Stamp duty land tax: application to certain partnership transactions
1
In Schedule 15 to the Finance Act 2003 (c. 14) (stamp duty land tax:
partnerships), for Part 3 (transactions excluded from stamp duty land tax)

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
546

substitute—
“Part 3
Transactions to which special provisions apply
Introduction
9     (1)
This Part of this Schedule applies to certain transactions
5
involving—
(a)
the transfer of an interest in land to a partnership
(paragraph 10),
(b)
the transfer of an interest in a partnership (paragraphs 12,
15, 23 and 24), or
10
(c)
the transfer of an interest in land from a partnership
(paragraph 16).
      (2)
References in this Part of this Schedule to the transfer of an interest
in land include—
(a)
the grant or creation of an interest in land,
15
(b)
the variation of an interest in land, and
(c)
the surrender, release or renunciation of an interest in land.
Transfer of interest in land to a partnership: general
10    (1)
This paragraph applies where—
(a)
a partner transfers an interest in land to the partnership, or
20
(b)
a person transfers an interest in land to a partnership in
return for an interest in the partnership, or
(c)
a person connected with—
(i)
a partner, or
(ii)
a person who becomes a partner as a result of or in
25
connection with the transfer,

transfers an interest in land to the partnership.

It applies whether the transfer is in connection with the formation
of the partnership or is a transfer to an existing partnership.
      (2)
The chargeable consideration for the transaction shall be taken to
30
be equal to a proportion of the market value of the interest
transferred.
      (3)
That proportion is the total of the other partners’ partnership
shares immediately after the transfer.
      (4)
Paragraph 11 applies (instead of sub-paragraphs (2) and (3)) if the
35
whole or part of the chargeable consideration for the transaction is
rent.
      (5)
Paragraphs 6 to 8 (responsibility of partners) have effect in relation
to a transaction to which this paragraph applies, but the
responsible partners are—
40
(a)
those who were partners immediately before the transfer
and who remain partners after the transfer, and
(b)
any person becoming a partner as a result of, or in
connection with, the transfer.

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
547

Transfer of interest in land to a partnership: chargeable consideration including rent
11    (1)
This paragraph applies in relation to a transaction to which
paragraph 10 applies where the whole or part of the chargeable
consideration for the transaction is rent.
      (2)
Schedule 5 provides for the calculation of the tax chargeable in
5
respect of the transaction, subject to the following provisions of
this paragraph.
      (3)
Paragraph 2 of Schedule 5 (calculation of tax chargeable in respect
of rent) has effect as if—
(a)
for “the net present value of the rent payable over the term
10
of the lease” there were substituted “the chargeable
proportion of the net present value of the rent payable over
the term of the lease”, and
(b)
for “the net present values of the rent payable over the
terms of all the leases” there were substituted “the
15
chargeable proportions of the net present values of the rent
payable over the terms of all the leases”.
      (4)
If there is chargeable consideration other than rent, that
chargeable consideration shall be taken to be equal to the
chargeable proportion of the market value of the interest
20
transferred.
      (5)
If there is no chargeable consideration other than rent—
(a)
there shall (despite that) be taken to be chargeable
consideration other than rent (in particular for the
purposes of paragraph 9 of Schedule 5), and
25
(b)
that chargeable consideration shall be taken to be equal to
the chargeable proportion of the market value of the
interest transferred.
      (6)
The chargeable proportion is the total of the other partners’
partnership shares immediately after the transfer.
30
Transfer of partnership interest: consideration given and interest in land held
12    (1)
A transfer of an interest in a partnership is a chargeable
transaction if—
(a)
consideration is given for the transfer, and
(b)
the relevant partnership property includes an interest in
35
land.

The purchaser under the transaction is the person who acquires an
increased partnership share or, as the case may be, becomes a
partner in consequence of the transfer.
      (2)
Consideration is regarded as given for the transfer—
40
(a)
in a case within paragraph 27(a), if consideration in money
or money’s worth is given by or on behalf of the person
acquiring the interest;
(b)
in a case within paragraph 27(b), if there is a withdrawal of
money or money’s worth from the partnership by the
45
person reducing his interest or ceasing to be a partner.

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
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      (3)
The “relevant partnership property”, in relation to a transfer of an
interest in a partnership, is every interest in land held as
partnership property immediately after the transfer, other than—
(a)
any interest that was transferred to the partnership in
connection with the transfer;
5
(b)
a lease to which paragraph 13 (exclusion of market rent
leases) applies.
      (4)
The chargeable consideration for the transaction shall be taken to
be equal to a proportion of the market value of the relevant
partnership property.
10
      (5)
That proportion is—
(a)
if the person acquiring the interest in the partnership was
not a partner before the transfer, his partnership share
immediately after the transfer;
(b)
if he was a partner before the transfer, the difference
15
between his partnership share before and after the transfer.
Exclusion of market rent leases
13    (1)
A lease held as partnership property immediately after a transfer
of an interest in the partnership is not relevant partnership
property for the purposes of paragraph 12(3) if the following three
20
conditions are met.
      (2)
The first condition is that—
(a)
no consideration other than rent has been given in respect
of the grant of the lease, and
(b)
no arrangements are in place at the time of the transfer for
25
any consideration other than rent to be given in respect of
the grant of the lease.
      (3)
The second condition is that the rent payable under the lease as
granted was a market rent at the time of the grant.
      (4)
The third condition is that—
30
(a)
the lease provides for the rent payable under it to be
reviewed;
(b)
the first review date is not more than 5 years after the date
on which the term of the lease begins;
(c)
if there is more than one review date under the lease, the
35
interval between any two of them is not more than 5 years;
(d)
the rent payable under the lease as a result of a review is
required to be the market rent at the review date (or, if
higher, the rent payable under the lease immediately
before the review date).
40
      (5)
The market rent of a lease at any time is the rent which the lease
might reasonably be expected to fetch at that time in the open
market.
      (6)
A review date is a date from which the rent determined as a result
of a rent review is payable.
45

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
549

Partnership interests: application of provisions about exchanges etc.
14    (1)
Where paragraph 5 of Schedule 4 (exchanges) applies to the
acquisition of an interest in a partnership in consideration of
entering into a land transaction with an existing partner, the
interest in the partnership shall be treated as a major interest in
5
land for the purposes of that paragraph if the relevant partnership
property includes a major interest in land.
      (2)
In sub-paragraph (1) “relevant partnership property” has the
meaning given by paragraph 12(3).
      (3)
The provisions of paragraph 6 of Schedule 4 (partition etc:
10
disregard of existing interest) do not apply where this paragraph
applies.
Transfer of partnership interest pursuant to earlier arrangements
15    (1)
This paragraph applies where—
(a)
there is a transfer of an interest in land to a partnership
15
(“the land transfer”);
(b)
the land transfer falls within paragraph (a), (b) or (c) of
paragraph 10(1);
(c)
there is subsequently a transfer of an interest in the
partnership (“the partnership transfer”);
20
(d)
the partnership transfer is made—
(i)
if the land transfer falls within paragraph 10(1)(a)
or (b), by the person who makes the land transfer;
(ii)
if the land transfer falls within paragraph 10(1)(c),
by the partner concerned;
25
(e)
the partnership transfer is made pursuant to arrangements
that were in place at the time of the land transfer;
(f)
the partnership transfer is not (apart from this paragraph)
a chargeable transaction.
      (2)
The partnership transfer is a chargeable transaction.
30
      (3)
The partners shall be taken to be the purchasers under the
transaction.
      (4)
The chargeable consideration for the transaction shall be taken to
be equal to a proportion of the market value, as at the date of the
transaction, of the interest transferred by the land transfer.
35
      (5)
That proportion is—
(a)
if the person making the partnership transfer is not a
partner immediately after the transfer, his partnership
share immediately before the transfer;
(b)
if he is a partner immediately after the transfer, the
40
difference between his partnership share before and after
the transfer.
      (6)
The partnership transfer and the land transfer shall be taken to be
linked transactions.
      (7)
Paragraphs 6 to 8 (responsibility of partners) have effect in relation
45
to the partnership transfer, but the responsible partners are—

Finance Bill
Schedule 39 — Stamp duty land tax: application to certain partnership transactions
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(a)
those who were partners immediately before the transfer
and who remain partners after the transfer, and
(b)
any person becoming a partner as a result of, or in
connection with, the transfer.
Transfer of interest in land from a partnership: general
5
16    (1)
This paragraph applies where an interest in land is transferred—
(a)
from a partnership to a person who is or has been one of
the partners, or
(b)
from a partnership to a person connected with a person
who is or has been one of the partners.
10
      (2)
There is a transfer of an interest in land from a partnership in any
case where—
(a)
an interest in land that was partnership property ceases to
be partnership property, or
(b)
an interest in land is granted or created out of partnership
15
property and the interest is not partnership property.
      (3)
The chargeable consideration for the transaction shall be taken to
be equal to the chargeable proportion of the market value of the
interest transferred.

Paragraph 18 provides for determining the chargeable proportion.
20
      (4)
Paragraph 17 applies (instead of sub-paragraph (3)) if the whole or
part of the chargeable consideration for the transaction is rent.
      (5)
For the purposes of this paragraph property that was partnership
property before the partnership was dissolved or otherwise
ceased to exist shall be treated as remaining partnership property
25
until it is distributed.
Transfer of interest in land from a partnership: chargeable consideration including
rent
17    (1)
This paragraph applies in relation to a transaction to which
paragraph 16 applies where the whole or part of the chargeable
30
consideration for the transaction is rent.
      (2)
Schedule 5 provides for the calculation of the tax chargeable in
respect of the transaction, subject to the following provisions of
this paragraph.
      (3)
Paragraph 2 of Schedule 5 (calculation of tax chargeable in respect
35
of rent) has effect as if—
(a)
for “the net present value of the rent payable over the term
of the lease” there were substituted “the chargeable
proportion of the net present value of the rent payable over
the term of the lease”, and
40
(b)
for “the net present values of the rent payable over the
terms of all the leases” there were substituted “the
chargeable proportions of the net present values of the rent
payable over the terms of all the leases”.
      (4)
If there is chargeable consideration other than rent, that
45
chargeable consideration shall be taken to be equal to the